Saturday, July 07, 2012

Quote of the day

The fact is that the incentives in our health-care system are all screwed up precisely because of government policies and programs. Medicare, the biggest player in our insurance system by far, is an arcane fee-for-service system that encourages volume over value and inflates (while shifting) costs. Medicaid, meanwhile, has a state-federal structure that makes cost-containment nearly impossible (by having state policymakers make spending decisions while the Feds pay at least half the cost in an open-ended way). 
And the tax exclusion for employer-provided coverage creates a huge incentive for high-premium insurance while shielding everyone involved from actual prices and costs. All the incentives point to cost inflation and away from outcome-based health economics, so we shouldn’t be surprised to have an inefficient system.
And that's far from a comprehensive list, missing items such as licensing restrictions that reduce the supply of health care professionals, the lack of an interstate health insurance market and government mandates for what items that insurance must cover. Basically, government introduces regulations and programs which distort the health care market, thus leading to bad outcomes, which are then used to justify further interventions, and the vicious cycle continues anew. Adding insult to injury, we are then hit with new taxes used to pay for the additional government meddling.

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